What is a Capital Reduction Demerger?
A capital reduction demerger is a method of corporate restructuring that involves reducing a company’s share capital and then dividing its business operations into separate entities without the need for a sale to a third party. For example, property or other assets can be separated from a trading business. This creates distinct business units operating independently.
This strategic approach allows companies to streamline their operations, sharpen their focus, and enhance shareholder value. It can be used as a method to protect the assets of a company, or it can be done to streamline a division of the business ready for a sale.
Benefits for your business
- Enhanced Shareholder Value: Shareholders gain direct ownership in the demerged entity, allowing them to benefit directly from different parts of the business.
- Simplified Corporate Structure: Each business unit can operate independently, improving operational clarity and efficiency.
- Tax Efficiency: Proper structuring can minimise tax liabilities for both the company and its shareholders.
Our experienced corporate law team is here to guide you through the legal stages of the demerger process, ensuring a smooth and compliant transition. We work with experienced external tax advisers, who will be responsible for the tax clearance and advice, or we can work with your advisers.
Client Case Study
Selling a company after 38 years
and why we chose HSR Law.
Client Case Study
The share-sale of a company
to an American buyer.
Have you ever wanted to just ask a lawyer if they can help you, without worrying about what it may cost to contact them? If so, call HSR Law Solicitors and together we can work out what your next steps might be… in confidence, at no cost and with no obligation. Complete our simple form with your name and contact number and we will call you back to discuss how we can help.
Alternatively, contact Andrew, Jonathan, Clair, Kingsley or Sharnika: our Corporate and Commercial Law specialists.
Your Capital Reduction Demerger Team
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HSR Law Solicitors receive a wonderful case study review from a client that instructed us to assist with the share sale of his company to an American buyer.